subject: 4 Debt Recovery Solutions That Work [print this page] Debt recovery can be time consuming and frustrating if customers continually ignore your requests for payment. Nevertheless, effective debt recovery ensures cash flow, which is one of the most important aspects of running a business. If there are problems in the flow of cash coming in from debts not being paid in a timely manner, this can result in a struggle to maintain operations and your ability to pay your own creditors.
Follow these four debt recovery solutions that will help to improve your debt collections and have a positive effect on your business.
Reminder notices
Reminder notices need to be sent out as soon as the debt becomes overdue. Keep a close watch on your debtors' listings and be aware of all outstanding invoices. Maintaining accurate records can help with this process.
Telephone calls
Making telephone calls as a follow up to invoicing and reminder notices that remain unpaid can have positive results. Certainly if an invoice has not been paid after 60 days a phone call is required. It may be the customer has genuinely forgotten about the debt or perhaps they have been out of town and not worked their way through the mail that has built up.
While you may want to give the debtor the benefit of the doubt to begin with, you will need to know when the time is right to pursue the matter further. A phone call can assist you in making this decision depending on their response.
Letters of demand
Letters of demand need to be written professionally and remind the customer of the terms and conditions of the original credit agreement or contract. Clearly state when you expect the debt to be paid in full and what you will do if this doesn't happen. You might want to give them the option to contact you with suitable progress payments or if the bill has been ignored for too long, advise them that you will have no alternative than to use an agency to recover the debt on your behalf. Give them a definite time frame to respond to the letter and be sure you follow through when the time has passed and you are still without payment.
Use a collection company
Timely collections make good business sense so if you are struggling to recover debt at any stage of the transaction, hand the matter over to a collection company. Using a third party can be beneficial for a number of reasons and will certainly assist you from keeping your distance with the offending customer, something that may become an issue if you are losing your patience. Not only do debt collection agencies give you the greatest chance of recovery, they will also ensure all dealings will be conducted in a professional manner. They will persist where you may have been ready to give up and free your time to get on with running your business. They are experts in debt recovery and allow you to focus on core business. Further, most will work on a no collection no fee' basis, which means you will not have to pay them anything unless they collect.
Summary
Having high success rates in debt recovery goes a long way in creating a better cash flow for your business. There are many factors why this is not always possible but by following the four steps above you will be making a good start to getting your business on track.
